General
Information
Last Update:
Mar. 10, 2011
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Part of the audited Consolidated Financial Statements and Management´s Analysis

Risk report

Identifying, evaluating and managing risks

Strategy and goal

  • Detect risks as early as possible
  • Take measures to limit business losses
  • Avoid risks that threaten the company’s continued existence
  • Support managerial decisions

The goal of BASF’s risk management is to identify and evaluate risks as early as possible and limit business losses by taking appropriate measures. The aim here is to avoid risks that pose a threat to BASF’s continued existence and to make improved managerial decisions to create lasting value. We understand risk to be any event that can negatively impact the achievement of our short-term operational or long-term strategic goals. We define opportunities as possible successes that exceed our defined goals.

Relative contribution to earnings from opportunities, risks and volatility

Relative contribution to earnings from opportunities, risks and volatility (bar chart)

Overall assessment

  • The most significant causes of risks and opportunities are the development of the economy and important customer industries as well as volatility in exchange rates and raw materials prices
  • Improved planning certainty compared with the previous year
  • No threat to the continued existence of the BASF Group

The year 2010 was characterized by a surprisingly quick recovery in demand in nearly all our segments, some significant increases in margins as a result of tight supplies, especially for Petrochemicals, and positive currency effects.

Compared with the previous year, there is greater planning certainty with regard to the earnings of the BASF Group in 2011. This is mainly due to higher confidence in the short-term development of our sales markets.

The most important opportunities and risks are associated with uncertainty regarding the overall economic situation and the development of key customer industries as well as volatility in foreign currency exchange rates and raw materials prices.

According to our assessment, there are still no significant individual risks that pose a threat to the continued existence of the BASF Group. The same applies to the sum of individual risks.

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Significant areas of opportunity and risk

 

 

Assessment

Development of the economic situation and sales markets

High contribution to overall volatility

Availability and price volatility of raw materials

High contribution to overall volatility

Creation of overcapacities

Long-term effects, strategic significance

Exchange rate volatility

High contribution to overall volatility

Remaining financial risks

Low contribution to overall volatility

Regulatory and political risks

Long-term effects, strategic significance

Specific opportunities and risks in the individual divisions

Medium contribution, high diversification

Further risk areas (human resources, R&D, IT, acquisitions, etc.)

Long-term effects, strategic significance

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